Dáil Éireann debate -
Tuesday, 10 Oct 1995

Vol. 456 No. 6

Written Answers. - Uncompetitive Environment.

James Leonard

Question:

35 Mr. Leonard asked the Minister for Enterprise and Employment if he has examined the point made by the Small Firms Association in its press release of 9 November 1994 relating to the uncompetitive environment between North and South; and if so, the way in which he proposes to redress this problem. [11586/95]

Minister for Enterprise and Employment (Mr. R. Bruton)

Officials in my Department have been examining the press release referred to by the Deputy. I and my Department welcome constructive contributions on the issue of competitiveness. The study highlighted cost differentials which can create difficulties in competing for certain sectors. Specifically the study highlights a higher average industrial wage in the South, a higher rate of PRSI, and a higher rate of corporation tax, for services as opposed to manufacturing operations. The study uses the example of a small retail business but the wage rates quoted for that business are average industrial earnings. While it is difficult to be specific with regard to earnings in the retail sector, they are unlikely to be at the same level as average industrial earnings. Many employees in the retail service sector in the Republic would qualify for the new low rate of employers' PRSI of 9 per cent on earnings up to £231 per week.

If one looks at any particular overseas market there will most likely always be competitive gains and losses as compared with the domestic market. On the general issue of competitiveness, the Deputy will be aware of the continuing efforts of this Government to enhance the competitiveness of Irish business so that it can compete successfully in all relevant markets. These efforts cover many economic areas important to business competitiveness. I have already referred to the reduced PRSI regime for low income sectors. In this year's budget, specific measures were introduced to reduce employers' PRSI and corporation tax. Employers' PRSI charges were reduced through increasing the threshold for the lower 9 per cent contribution rate of PRSI from £173 to £231 per week, £12,000 per annum.

The focus of the current operational programme for industrial development is on improving the competitiveness and ability of Irish business to compete in the international trading place. The operational programme for transport is building on the last operational programme and will significantly improve the physical infrastructure for business operating in the South.

In regard to the UK opt-out from the EU social Protocol, to which reference also is made in the SFA press release, I do not believe that this factor has conferred any material competitive advantage on Northern Irelandvis-à-vis the South. I do accept that we must keep that position under review and we are doing that.

I can assure the Deputy that I and my Department will continue to monitor closely and seek improvements in the competitiveness of Irish goods and services so as to maximise employment levels in the economy.